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Real Estate Investments | 6 Months Ended
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Jun. 30, 2018
Real Estate [Abstract] |
REAL ESTATE INVESTMENTS | 3. REAL ESTATE INVESTMENTS As of June 30, 2018 and December 31, 2017, the gross carrying value of the operating properties was as follows (in thousands):
| June 30, |  |  | December 31, |
| 2018 |  |  | 2017 |
Land | $ | 497,517 |  |  | $ | 492,197 |
Building and improvements |  | 2,911,910 |  |  |  | 2,896,113 |
Tenant improvements |  | 455,202 |  |  |  | 444,038 |
Total | $ | 3,864,629 |  |  | $ | 3,832,348 |
Acquisitions On June 29, 2018, the Company acquired, through a 99-year ground lease, the leasehold interest in a one-acre land parcel, located at 3025 JFK Boulevard, in Philadelphia, Pennsylvania. The Company prepaid $15.0 million of ground lease rent and, in accordance with ASC 840, capitalized $0.3 million of costs related to entering the lease. Additionally, the ground lease required the Company to pay $5.6 million for a leasehold valuation credit, which can be applied to increase the density of the projects subject to the Schuylkill Yards Project master development agreement. Of this credit, $2.4 million will be applied to the development of 3001-3003 and 3025 JFK Boulevard if the Company constructs a minimum of 1.2 million square feet of floor area ratio (“FAR”) on these land parcels. The remaining credit of $3.2 million can be used for development in excess of 1.2 million FAR at 3001-3003 and 3025 JFK Boulevard or toward future ground lease takedowns at the Schuylkill Yards Development Site. This $3.2 million credit is reimbursed if the master development agreement is terminated by the landowner. Based on the Company’s evaluation under ASC 840, the ground lease is classified as an operating lease. The ground lease and credit are included in the “Prepaid leasehold interests in land held for development” and “Other assets” captions, respectively, in the consolidated balance sheets. On March 22, 2018, the Company acquired, through a 99-year ground lease, the leasehold interest in a one-acre land parcel, located at 3001-3003 JFK Boulevard, in Philadelphia, Pennsylvania. The Company prepaid $24.6 million of ground lease rent and, in accordance with ASC 840, capitalized $0.3 million of costs related to entering the lease. Based on the Company’s evaluation under ASC 840, the ground lease is classified as an operating lease and included in the “Prepaid leasehold interests in land held for development” caption in the consolidated balance sheets. On January 5, 2018, the Company acquired, from its then partner in each of the Four Tower Bridge real estate venture and the Seven Tower Bridge real estate venture, the partner’s 35% ownership interest in the Four Tower Bridge real estate venture in exchange for the Company's 20% ownership interest in the Seven Tower Bridge real estate venture. As a result of this non-monetary exchange, the Company acquired 100% of the Four Tower Bridge real estate venture, which owns an office property containing 86,021 square feet, in Conshohocken, Pennsylvania, encumbered with $9.7 million in debt. The Company previously accounted for its noncontrolling interest in Four Tower Bridge using the equity method. As a result of the exchange transaction, the Company obtained control of the Four Tower Bridge property. The Company’s acquisition of the 35% ownership interest in Four Tower Bridge from its former partner resulted in the consolidation of the property, which has been accounted for as an asset acquisition under ASU 2017-01. As such, the Company capitalized $0.1 million of acquisition-related costs and allocated the unencumbered acquisition value, consisting of the fair value of $23.6 million and the acquisition-related costs, to tangible and intangible assets and liabilities. The unencumbered acquisition value was determined under the comparative sales approach, which utilized observable transactions within the Conshohocken submarket. The Company utilized a number of sources in making estimates of fair value for purposes of allocating the acquisition value to tangible and intangible assets acquired. The acquisition value has been allocated as follows (in thousands):
|  | January 5, 2018 |
Building, land and improvements |  | $ | 20,734 |
Intangible assets acquired (a) |  |  | 3,144 |
Below market lease liabilities assumed (b) |  |  | (182 | )
Total unencumbered acquisition value |  | $ | 23,696 |
Mortgage debt assumed - at fair value (c) |  |  | (9,940 | )
Total encumbered acquisition value |  | $ | 13,756 |
Total unencumbered acquisition value |  |  | 23,696 |
Mortgage debt assumed - at fair value (c) |  |  | (9,940 | )
Investment in unconsolidated real estate ventures |  |  | (3,502 | )
Net working capital assumed |  |  | 1,379 |
Gain on real estate venture transactions |  | $ | 11,633 |
(a)Weighted average amortization period of 4.1 years. (b)Weighted average amortization period of 4.8 years. (c)The outstanding principal balance on mortgage debt assumed at January 5, 2018 was $9.7 million. Four Tower Bridge contributed approximately $0.7 million and $1.4 million of revenue and $0.1 million of net loss and $0.1 million of net income, included in the Company’s consolidated income statements, for the three- and six-month periods ended June 30, 2018, respectively. Dispositions The Company sold the following office property during the six-month period ended June 30, 2018 (dollars in thousands):
Disposition Date |  | Property/Portfolio Name |  | Location |  | Type |  | Number of Properties |  | Rentable Square Feet |  |  | Sales Price |  |  | Net Proceeds on Sale |  |  | Loss on Sale |  |
June 21, 2018 |  | 20 East Clementon Road |  | Gibbsboro, NJ |  | Office |  | 1 |  |  | 38,260 |  |  | $ | 2,000 |  |  | $ | 1,850 |  |  | $ | (35 | ) |
Total Dispositions |  |  |  |  |  |  |  | 1 |  |  | 38,260 |  |  | $ | 2,000 |  |  | $ | 1,850 |  |  | $ | (35 | ) |
The Company sold the following land parcels during the six-month period ended June 30, 2018 (dollars in thousands):
Disposition Date |  | Property/Portfolio Name |  | Location |  | Number of Parcels |  |  | Acres |  |  | Sales Price |  |  | Net Proceeds on Sale |  |  | Gain on Sale |  |
March 16, 2018 |  | Garza Ranch - Office |  | Austin, TX |  |  | 1 |  |  |  | 6.6 |  |  | $ | 14,571 |  |  | $ | 14,509 |  |  | $ | 1,424 |  | (a)
January 10, 2018 |  | Westpark Land |  | Durham, NC |  |  | 1 |  |  |  | 13.1 |  |  |  | 485 |  |  |  | 412 |  |  |  | 22 |  |
Total Dispositions |  |  |  |  |  |  | 2 |  |  |  | 19.7 |  |  | $ | 15,056 |  |  | $ | 14,921 |  |  | $ | 1,446 |  |
(a) | As of March 31, 2018, the Company had not transferred control to the buyer of this land parcel, or two other parcels at this site which were sold during 2017, because of a completion guarantee which required the Company, as developer, to complete certain infrastructure improvements on behalf of the buyers of the land parcels. The cash received at settlement was recorded as “Deferred income, gains and rent” on the Company’s consolidated balance sheets. During the three months ended June 30, 2018, the infrastructure improvements were substantially completed, at which time the Company transferred control of the land parcels. As a result, the Company then recognized the sale of the land parcels. See Note 2, “Basis of Presentation,” for further discussion of the infrastructure improvements and related revenue recognition.
The sales of property and land referenced above do not represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, the operating results of these properties remain classified within continuing operations for all periods presented. Held for Sale As of June 30, 2018, the Company had land held for development, consisting of a 2.7-acre parcel of land containing a vacant office building located in the Company’s Pennsylvania Suburbs segment, classified as held for sale but which did not meet the criteria to be classified within discontinued operations. As of June 30, 2018, $4.3 million was reclassified from the “Land held for development” caption to the ”Assets held for sale, net” caption on the consolidated balance sheets. There were no other reclassifications related to this parcel of land. As of June 30, 2018, the carrying value of the land was less than the fair value less the anticipated costs of sale and, as such, the Company expects to record a nominal gain on sale. The fair value measurement is based on the pricing in the purchase and sale agreement. The disposal of the property referenced above does not represent a strategic shift that has a major effect on the operations and financial results of the Company. As a result, the operating results of this property remain classified within continuing operations for all periods presented.

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -URI http://asc.fasb.org/topic&trid=2156125 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 978 -URI http://asc.fasb.org/topic&trid=2134977 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 976 -URI http://asc.fasb.org/topic&trid=2134846 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 974 -URI http://asc.fasb.org/topic&trid=2156429 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 972 -URI http://asc.fasb.org/topic&trid=2134617 + Details
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